Beijing Tightens Financial Oversight

Pamir posits that the appointment of WU Qing as the new chair of the China Securities Regulatory Commission signals further tightening of financial oversight and an attempt to restore order in China’s financial industry. 

On 7 February China’s top leadership unexpectedly removed YI Huiman from his chairmanship of the China Securities Regulatory Commission (CSRC), a position he had occupied since January 2019. In the absence of government explanations, observers have speculated that Yi’s sudden removal was intended to appease public grievances about China’s stock markets, reflected a loss of confidence in Yi’s ability to oversee the financial sector, and indicated Yi’s involvement in corruption.

• China’s stock markets have been in a downward spiral. As was the case in 2016, when the CSRC chairman was removed amid a Chinese stock market rout, Yi was dismissed to restore public confidence. 
• In October 2023 a national financial work conference that examined China’s financial security highlighted disorder, irregularities, and corruption under Yi’s watch. Yi’s dismissal was necessary as Beijing seeks to strengthen its oversight. 
• In November 2023 Yi disappeared from public view for three weeks, fueling speculation that he was under investigation for corruption. Over the past several years, senior CSRC officials and top executives in the Industry and Commercial Bank of China (ICBC), China’s largest state-owned bank, have been arrested for corruption. Before becoming the CSRC chairman, Yi worked at ICBC for over 30 years, eventually rising to become chairman of ICBC. Yi’s unexpected removal likely indicates his involvement in corruption.

The appointment of WU Qing as China’s top securities regulator likely reflects his personal ties to Premier LI Qiang, Wu’s extensive experience as a government regulator, and Beijing’s determination to restore order in the financial sector. 

• During Li’s recent tenure as Party secretary in Shanghai (2017-2022), Wu served as the city’s vice mayor and executive vice mayor. As CSRC chairman, Wu now is a member of the Central Financial Commission that Li chairs. The Commission was established in November 2023 to strengthen Party oversight of the financial sector.
• Wu has extensive central and local government experience. Wu began his career in the National Planning Commission, which was responsible for China’s macroeconomic planning. Wu later headed the CSRC Funds Oversight Department in 2009. During his tenure as the top official in Shanghai’s Hongkou District, Wu created China’s first hedge fund park and the Shanghai Venture Capital Investment Center. In 2016 he was appointed Party secretary and chairman of the Shanghai Stock Exchange. After being promoted to the Shanghai municipal government in 2017, Wu oversaw the city’s finance, taxation, and auditing work. 
• Wu is known as a tough enforcer of government regulations. During his earlier tenure at CSRC, Wu earned the nickname “butcher of stockbrokers.” On 8 February, the day after Wu took over as CSRC chairman, CSRC penalized two major Chinese securities companies for unfair competition, disclosure failures, and other irregularities. On 9 February, CSRC penalized 63 Chinese stockbrokers and fined them RMB 81.73 million for irregularities. Also on 9 February, CSRC fined a Shanghai chip company RMB 16.5 million for false disclosure in its IPO document.